GoI appointed three Monetary Policy Committee Members

Government of India have appointed economists Jayant R Varma, Shashank Bhide and Ashima Goyal as the new members of Monetary Policy Committee (MPC) which was set up in 2016. The appointments were made after the decision was cleared by the Appointment Committee of the Cabinet chaired by PM Modi.

Monetary Policy Committee

The MPC prepare the monetary policies for the country using the monetary policy tools that include bank rate, repo rate, reverse repo rate and cash reserve ratio. The Committee was constituted under Section 54ZB of the reserve Bank of India (RBI) act, 1934.

Selection procedure

The members of the MPC are appointed by the government of India (GoI). They are selected by a search-cum-selection committee. This committee comprises of RBI Governor, three experts in the field of economics either finance or banking and the economic affairs secretary.

Composition

The committee consists of six members. Out of these, three are nominated by GoI that must not be a Government official. The other three member of the committee are appointed by the RBI itself. The RBI Governor acts as the ex-officio chairperson of the committee while the Executive Governor of the bank acts as the Deputy Governor.

Term of office

The members are appointed for a period of four years and they are not eligible of reappointment.

Functions of the Committee

As per the recommendations made by Chakravarty Committee, the main functions of committee include:

• To set the monetary policy norms related to the economic growth, social justice, price stability, equity and encouraging growth for the new financial enterprises.
• It tries to keep the inflation rates under control when the Government tries to accelerate the GDP growth rate.
• The committee also decided the policy interest rate, bank rate, repo rate, Reverse Repo Rate etc.